Operators will not be in a position to take advantage of location-based service (LBS) revenues, which are predicted to hit €2.3 billion in 2018, according to new research.

Berg Insight said LSB sales are set to grow at a CAGR of 26 percent between now and 2018, but it will be OTT players who dominate the consumer LBS ecosystem by leveraging location data from handsets and on-device app stores for distribution.

About 50 percent of all mobile subscribers in Europe were frequent users of at least one location-based service at the end of 2013, the research firm estimated, when revenues stood at €735 million.

The social networking and entertainment category – comprising a broad set of services that can be segmented into general social networking, messaging apps, friend finders and games – has now become the largest LBS segment both in terms of number of active users and revenues.

Mapping and navigation is the second largest segment in terms of revenues and the third largest in terms of number of active users. Local search is the second largest LBS category in terms of active users and the third largest in terms of revenues.

“Advertising is the main source of revenues for most consumer oriented LBS,” said Berg Senior Analyst André Malm. “Revenues are however far from evenly distributed as major players including Facebook and Google with broad audiences have attracted the majority of ad spend”.

Instead, mobile operators are exploring opportunities in the enterprise and B2B market where network-based location data can be used for a wide range of services such as asset tracking, fraud management, secure authentication and location-based advertising.

“Some mobile operators have also started to collect passive location information of subscribers for use in mobile analytics services”, said Malm.

This anonymous bulk location data can be used to improve the performance of mobile networks and support operators’ internal marketing campaigns, Berg added.

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